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September 1, 2009

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Publisher cuts costs to beat downturn

GERMANY'S Bertelsmann has posted a 30 percent drop in first-half operating profit due to a steep decline in advertising and consumer spending, and said cost cuts had held off worse results.

The owner of European broadcaster RTL Group, which reported results last week, and publisher Random House implemented strict cost savings earlier in the year to counter falling advertising revenues and to minimize the impact of the economic crisis on the group.

Chief Executive Hartmut Ostrowski said yesterday that the measures will lead to cost savings of 900 million euros (US$1.29 billion) this year.

"The second half of the year will still see cost cuts, but at present we expect that the programs we introduced will be sufficient to steer Bertelsmann safely and successfully through this difficult economy," he added.

In the first six months of 2009 Bertelsmann's operating profit was 475 million euros compared with 685 million euros a year earlier on sales of 7.2 billion euros, down 6.5 percent.

Net loss was 333 million euros compared with a net profit of 372 million euros in the first half of 2008.

Chief Financial Officer Thomas Rabe said "financially, Bertelsmann is on safe ground" and had "good liquidity and adequate credit lines available."

He reiterated the company's full-year outlook of a decline in revenues and operating profit.

"The extent of year-on-year change will be determined by the severity and duration of the cyclical downturn," Rabe added.


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